Suppose You Transfer $1,000 from Your Checking Account to Your

question 33

Multiple Choice

Suppose you transfer $1,000 from your checking account to your savings account. How does this action affect the M1 and M2 money supplies?

• A) M1 and M2 are both unchanged.
• B) M1 falls by $1,000, and M2 rises by $1,000.
• C) M1 is unchanged, and M2 rises by $1,000.
• D) M1 falls by $1,000, and M2 is unchanged.

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Definitions:

Fechner's Law

A principle describing the logarithmic relationship between stimulus magnitude and the resultant sensory experience's intensity.

Specificity Theory

The proposal that different sensory qualities are signaled by different quality-specific neurons. This theory is correct in only a few cases (e.g., pain).

Sensation

The process by which sensory receptors and the nervous system receive and represent stimulus energies from the environment.

Neurons

The basic working units of the brain, specialized cells designed to transmit information to other nerve cells, muscle, or gland cells.